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Tuesday, May 16, 2017

The wonder of yonder in Malaysia

The Malaysian PM is obliged to say only good things when abroad. This is in keeping with the spirit not to offend the host, in this case, China.

But the Malaysian PM is also expected to defend the national interests of the country. This, to be sure, is a tall order.

As multinationals, especially those in China, have grown into such gargantuan size that they can practically lord over the terms of their entries to any country.

This is where the PM must be beyond reproach. He cannot be above the law, nor can he subvert it. Rules and regulations are placed to defend the interest of the country, one of which is open bidding.

By declaring publicly that the Wanda Entertainment Group can be the darling of Bandar Malaysia, one wonders if the PM knows he has subverted that very process that his predecessors have put in place to guard and guarantee the country from being compromised by other bigger entities and powers?

The PM, just as he was oblivious to 1MDB, an entity that was supposed to function as the sovereign fund of Malaysia, has become impervious to his own faux pas (false step) once again.

Wanda can no more be given any preferential treatment than Warners Meyer - if the idea is to find the best anchor developer to build what is now still a big hole in the heart of Kuala Lumpur.

Besides, reports suggest that US$8 billion (some say US$10 billion) is expected from Wanda. Yet when Wanda tried to buy the Dick Clark Productions at one-eighth the price in Hollywood, the treasury authorities in Beijing shot the idea down.

Linda Yueh, writing in Nikkei Asia Review, notes that Ten Cent Group of WeChat fame, managed to “invest US$1.7 billion in Tesla”, a company that specialises in technological breakthroughs and space travel.

What makes a hole in the ground so special - as indeed is Bandar Malaysia - so special that the investment expected from Wanda will be more important than Tesla’s tech play in the US?

Malaysia is drifting, and sinking, ever so slowly. In the op-ed to South China Morning Post (SCMP) on May 12, the PM wrote that it must seem “ridiculous” to the readers of the newspaper that there are Malaysians out to deny Chinese foreign direct investments from coming into Malaysia.

Malaysia is a part of Asia Pacific Economic Cooperation (Apec) just as it is part of the China Asean Free Trade Agreement (Cafta). Malaysia welcomes investments from China or even the US.

What Malaysia cannot tolerate is the tendency of the Malaysian PM to promote our open-door policy to all and sundry without them going through the proper bidding and conceptualisation process.

Wanda Entertainment Group, for what it is worth, owns the AMC cinema outlets in the US. And it is big on the entertainment business in China, too.

If this be the case, does this mean that Bandar Malaysia is built to cater to the business vision of Wanda, or, the national interest of Malaysia?

Dealing with the dawn of automation

Surely what Malaysia needs now is an economic paradigm to deal with the dawn of automation, robotics, artificial intelligence and an apps-driven economy.

These are the trends in the world that will become the structural backbone of Malaysia vis-a-vis the world. In fact, despite the sophistication of Japan, only 46 percent of the country, according to McKinsey Global Institute, are ready for the dawn of robotics.

In other words, half of Japan is ready. Granted that Malaysia is years behind Japan as yet, the extent to which Malaysia can benefit from a dramatically changed world will probable by half of Japan if not one-third or even lesser.

This means amidst the middle income trap of Malaysia, Malaysia needs a new economic paradigm to benefit from the advances in other countries, indeed, even to form strategic alliances with those who can help Malaysia overcome the travails and tribulations of an apps driven world.

Instead, this PM ditched China Railway Engineering Company (CREC), which is 100 percent owned by the Ministry of Finance in China, in preference for Wanda.

Little wonder Wanda chairperson Wang Jianlin can only speak in platitudes that Wanda looks forward to helping Malaysia. Wang Jianlin’s statement recently did not give specific confidence that the deal has been made except: “today, I also talked to the Prime Minister (Najib) about this project. It is a large project worth over US$10 billion and we have not finalised a deal yet.”

Not even the customary or face-saving memorandum of understanding (MOU) signed. Just talk. Plain talk over perhaps several cups of Chinese tea and fortune cookies.

Then again, how can Wanda help when the Malaysian PM is also rubbing shoulders with Jack Ma of Ali Baba? As of today, Jack Ma owns 6.4 percent of the publicly listed shares of Ali Baba Group in Wall Street. This implies Jack Ma can no longer sway the board members of Ali Baba which includes SoftBank of Japan and Yahoo of the US. So how then he can say, “Ali Baba is with Malaysia all the way.”

If Jack Ma did utter those words, the rules of corporate governance implies he needs to get a buy in from SoftBank and Yahoo, too. Has the PM even done his homework work to reach out to these two behemoths in the stock markets?

No. What Malaysia is expected to contend with is the PM’s “assurance” (emphasis mine) that Wanda will be in, and Ali Baba will be in too. And that Malaysia will be a part of the ‘One Belt One Road Initiative’ (OBOR).

The issue is OBOR is a platform for 62 countries to interact, with more to come. Eventually some 80 countries will be clambering for funds and more funds from China and other multilateral aid agencies, too.

All these imply processes and more processes in order for China to get the mechanics and dynamics right. It also means Malaysia will not necessarily get any special treatment from OBOR. After all the Philippines has asked for US$70 billion to develop the infrastructure there. China is rich but it is not stupid.

The same applies to Wanda, too. Not unless Bandar Malaysia has a high speed railway that is given to China, a decision that has to be decided by open tender again, why would Wanda invest in a big hole in Kuala Lumpur whose value is derivative from the Petronas Twin Towers built by Dr Mahathir Mohamad anyway?

DR RAIS HUSSIN is a supreme council member and head of policy and strategy of Parti Pribumi Bersatu Malaysia (Bersatu).- Mkini